Welcome to the NCERT Solutions for Class 12 Micro Economics. This page offers chapter-wise solutions designed to help students grasp key concepts easily. With detailed answers and explanations for each chapter, students can strengthen their understanding and prepare confidently for exams. Ideal for CBSE and other board students, this resource will simplify your study experience.
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Chapter 1 Introduction to Micro Economics
This chapter introduces the basics of microeconomics, emphasizing its importance in analyzing specific markets and guiding individual decision-making. It distinguishes microeconomics from macroeconomics, focusing on smaller economic units like households and firms. The chapter explores core economic problems such as what to produce, how to produce, and for whom to produce, which arise due to the scarcity of resources. Concepts like opportunity cost and the production possibility frontier (PPF) are discussed, highlighting their role in efficient resource allocation. By understanding these principles, students can grasp how individual decisions influence resource utilization and the broader economy
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Chapter 2 Theory of Consumer Behaviour
This chapter explores how consumers make choices to maximize their satisfaction with limited resources. It introduces utility, distinguishing between Total Utility (TU) and Marginal Utility (MU), and explains the Law of Diminishing Marginal Utility, which states that satisfaction decreases with each additional unit consumed. The chapter also covers the consumer's budget and budget line, showing the combinations of goods a consumer can afford. It delves into indifference curve analysis and the Marginal Rate of Substitution (MRS), which illustrate consumer preferences and trade-offs. Finally, it explains consumer equilibrium, where satisfaction is maximized, providing a foundation for understanding consumer behavior and its effect on market demand.
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Chapter 3 Production and Costs
This chapter explains the production function, highlighting short-run and long-run production. It introduces the Law of Variable Proportions and returns to scale to describe output changes. On costs, it discusses fixed, variable, total, average, and marginal costs, emphasizing the relationship between cost curves. It lays the foundation for understanding production processes, cost structures, and decision-making for efficiency.
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Chapter 4 The Theory of the Firm under Perfect Competition
This chapter explores the functioning of firms in a perfectly competitive market with many buyers and sellers, homogeneous products, and free market entry and exit. It introduces key revenue concepts like total revenue (TR), average revenue (AR), and marginal revenue (MR), emphasizing firms as price takers. The chapter explains profit maximization, achieved when marginal cost equals marginal revenue, and differentiates between short-run and long-run equilibrium. It provides insights into market efficiency, resource allocation, and competition dynamics in perfect competition.
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Chapter 5 Market Equilibrium
This chapter explains market equilibrium, where demand equals supply, determining price and quantity. It explores how shifts in demand or supply and government interventions like price ceilings and floors affect equilibrium. The role of the price mechanism in efficient resource allocation and market stability is also highlighted.
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Chapter 6 Non-competitive Markets
This chapter covers non-competitive markets, including monopoly, monopolistic competition, and oligopoly, focusing on price control, entry barriers, and product differentiation. It explains firms' profit-maximizing strategies, their impact on consumers, and the role of government regulation in curbing unfair practices.
Popular Questions of Class 12 Micro Economics
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The market price of a good changes from Rs 5 to Rs 20. As a result, the quantity supplied by a firm increases by 15 units. The price elasticity of the firm’s supply curve is 0.5. Find the initial and final output levels of the firm.
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A firm earns a revenue of Rs 50 when the market price of a good is Rs 10. The market price increases to Rs 15 and the firm now earns a revenue of Rs 150. What is the price elasticity of the firm’s supply curve?
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How does the imposition of a unit tax affect the supply curve of a firm?
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What is the supply curve of a firm in the long run?
- Q:-
Distinguish between a centrally planned economy and a market economy.
- Q:-
A consumer wants to consume two goods. The prices of the two goods are Rs 4
and Rs 5 respectively. The consumer’s income is Rs 20.
(i) Write down the equation of the budget line.
(ii) How much of good 1 can the consumer consume if she spends her entire
income on that good?
(iii) How much of good 2 can she consume if she spends her entire income on
that good?
(iv) What is the slope of the budget line?
Questions 5, 6 and 7 are related to question 4. - Q:-
How will a change in the price of coffee affect the equilibrium price of tea? Explain the effect on equilibrium quantity also through a diagram.
- Q:-
Suppose your friend is indifferent to the bundles (5, 6) and (6, 6). Are the preferences of your friend monotonic?
- Q:-
What is the total product of input?
- Q:-
Why does the SMC curve cut the AVC curve at the minimum point of the AVC curve?
Recently Viewed Questions of Class 12 Micro Economics
- Q:-
If the price of a substitute Y of good X increases, what impact does it have on the equilibrium price and quantity of good X?
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What is the marginal product of an input?
- Q:-
Discuss the central problems of an economy.
- Q:-
What is the reason for the long run equilibrium of a firm in monopolistic competition to be associated with zero profit?
- Q:-
Suppose a consumer wants to consume two goods which are available only in
integer units. The two goods are equally priced at Rs 10 and the consumer’s
income is Rs 40.
(i) Write down all the bundles that are available to the consumer.
(ii) Among the bundles that are available to the consumer, identify those which cost her exactly Rs 40. - Q:-
The market demand curve for a commodity and the total cost for a monopoly firm producing the commodity are given in the schedules below.
Quantity
0
1
2
3
4
5
6
7
8
Price
52
44
37
31
26
22
19
16
13
Quantity
0
1
2
3
4
5
6
7
8
Price
10
60
90
100
102
105
109
115
125
Use the information given to calculate the following:
(a) The MIR and MC schedules
(b) The quantities for which MIR and MC are equal
(c) The equilibrium quantity of output and the equilibrium price of the commodity
(d) The total revenue, total cost and total profit in the equilibrium
- Q:-
What do you mean by an ‘inferior good’? Give some examples
- Q:-
From the schedule provided below calculate the total revenue, demand curve and the price elasticity of demand:
Quantity
1
2
3
4
5
6
7
8
9
Marginal
Revenue
10
6
2
2
2
0
0
0
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- Q:-
Compare the effect of shift in the demand curve on the equilibrium when the number of firms in the market is fixed with the situation when entry-exit is permitted.
- Q:-
Consider the demand curve D (p) = 10 – 3p. What is the elasticity at price 53?